If John Harvey-Jones said it, it must be worth paying attention!
24th October 2018
What should your accountant do for you? – part 4
If your accountant is truly proactive, willing to communicate and encourage you and can give you independent and objective advice on business issues, have you considered that they might be in the perfect position to become a non-executive director in your business? In the last article of this series, let’s take a look at what this means for you and your accountant.
A non-executive director, often abbreviated to NED, is a company board member who is an independent or external director but is not part of the executive management team.
There are, of course, personal qualities needed to be effective in gaining trust with board members – good communication skills, being well-informed about your company and have a solid understanding of the issues of your business.
The Corporate Governance Code sets out the standards for good practice for leaders of the board – their accountability, remuneration, their relationship with shareholders and their overall effectiveness in the role.
The guidance on board effectiveness published by the Financial Reporting Council states that “Non‐executive directors have a responsibility to uphold high standards of integrity and probity.”
It’s important your accountant be all of these when you consider the liability of directors. Even though they are non-executive they will still be held responsible as any other director of the company. These potential liabilities can be kept in check by performing their key responsibilities well.
If your accountant fits the bill, and is willing to take on that role, you can expect them to contribute high quality independent and objective advice and demonstrate a high level of integrity. And independence is the key here: they do not have executive responsibilities in the company and are not an employee of it, although they can expect to be paid fees for their role. They should also have the ability to constructively evaluate and challenge the management’s performance at a board meeting.
But I’m too small to have a board
If you are only just starting up, or are only a small team, having a NED might seem redundant. Yes, John Harvey-Jones (formed CEO of ICI and BBC’s troubleshooter) once said that
“every business, no matter the size, should review their business, once a quarter, with a numerate outsider.”
…a numerate outsider….
So, even in a small business, you could ask your accountant to act as a virtual NED once every three months.
An away day to look at the past and how you are doing against future goals could be just what you need to take your business forward and realise your dreams.
Now we’ve come to the end of this series on your accountant’s role in your business, what have all of these four articles got in common? Here’s a run-down of all the things you can expect of a good accountant, so that you have confidence in their standards, knowledge and abilities:
- Have the skills to educate you
- Be proactive in nature
- Establish and build open communication and trust
- Have a good overarching understanding of your business
- Have an eye on financial trends and other businesses in your sector
- And if their personal skills and ability match with the values of your company, a place on your board as non-executive director
If you would like to know more about how we can be your numerate outsider then contact us for a conversation.